ASEAN-China Free Trade Area benifits both sides

[grey boy 2]

ASEAN-China Free Trade Area benifits both sides 09:06, October 25, 2009

The ASEAN-China Free Trade Area (ACFTA) that takes effect early next year is well on track, with great potentials to produce huge benefits to both sides.

During the on-gong 15th ASEAN Summit and Related Summits, ASEAN leaders said Saturday that the effective implementation of the major milestone in FTA brings ASEAN closer to the ASEAN Economic Community where free flow of goods is one of its major objectives.

After the launching of the ACFTA, 90 percent of products traded between ASEAN and China will enjoy zero tariffs and other favourable policies will also be in place for trade and investment.

The ACFTA will be the biggest free trade zone in the world, forming a market with a population of 1.9 billion and a combined GDP of 6 trillion U.S. dollars.

In an interview with Xinhua, ASEAN Secretary general Dr. Surin Pitsuwan said that the ASEAN-China FTA, which will be formally launched on Jan. 1, 2010, will pave the way for more efforts to build the community in ASEAN.

"As China emerges as the third largest economy, closer cooperation and integration with the ASEAN economies will certainly ascend our position around the world. Our production cost will be lower, the efficiency and the distribution of the products to the rest of the world will be more effective," said Surin.

He said that Chinese firms production base in ASEAN countries will give China the advantage of the markets in western part of the region.

"We hope that as China grows, China will continue opening its market to ASEAN countries. ASEAN will continue to be stability and security for the region," he said.

According to Surin, economic growth, trade and investment will depend on security and stability, on sense of confidence that people have in the region.

"So we hope good neighbourly relation between China and ASEAN will continue and will promote productivity, "he said.

The ASEAN secretary general also said that as ASEAN countries help China in improving its growth by supplying components for China manufacturers, China can provide its assistance to help countries in Southeast Asia region spur their economic growth by technology transfer, training programs, investment and tourism.

"There are ways to help each other, accommodate each other. In every economy relationship, there is no one-way benefit. There is no one interest to be taken care of. There have to be through many ways. It is the really way of mutual benefit," Surin said.

Apart from that, Surin also said that the ASEAN-China FTA will pave the way for more efforts to build the community in ASEAN.

"ASEAN could become China's strategy policy coordination forum aimed at boosting the community building in the region," he said.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Thailand, the Philippines, Singapore and Vietnam.

Source:Xinhua
ASEAN-China Free Trade Area benefits both sides - People's Daily Online

 

[grey boy 2]

ina-ASEAN FTA to accelerate RMB regionalization16:44, October 23, 2009

The Chinese currency yuan is expected to play a bigger role in regional trade as the China-ASEAN Free Trade Area (CAFTA) is to be realized on January 1of 2010.

"The upcoming CAFTA, which boasts the largest population among all the world's FTAs and allows zero-tariff on 90 percent of products traded between China and ASEAN, will quicken the process of RMB regionalization, "Xu Ningning, executive secretary general of China-ASEAN Business Council, told Xinhua at the 6th China-ASEAN Expo in Nanning, capital of Guangxi Zhuang Autonomous Region.

Free trade demands free flow of currency, making possible the regional use of RMB, he said.

The expo, held from Oct. 20 to 24 ahead of the operation of FTA to embrace free trade and mutual investment, attracted state leaders, high-ranking officials and entrepreneurs from inside and beyond the ASEAN region.

Alongkorn Ponlaboot, deputy minister of commerce of Thailand, believed RMB would play a more important role in bilateral trade between China and ASEAN in the future.

He said yuan was a very stable currency and expanding its use could help reduce risks faced by the ASEAN countries in using the U.S. dollar, which has become highly volatile as a result of the global financial crisis.

Pung Kheav Se, general manager of Canadia Bank Plc. of Cambodia, echoed Thailand's deputy minister, saying trade between China and ASEAN kept growing and less risk by the use of RMB would benefit both sides.

Data from China's General Administration of Customs showed trade between China and ASEAN totaled 105.88 billion U.S. dollars in 2004, and rose to 231.07 billion U.S. dollars in 2008. China and ASEAN are currently the fourth largest trade partners to each other.

CHALLENGES AND EFFORTS

However, the use of yuan in ASEAN fell far short of the trade growth between China and ASEAN. Currently RMB settlement was mainly adopted in border trade which accounted for only 10 percent of the China-ASEAN bilateral trades, Teng Chong, board chairman of Guangxi Beibu Gulf Bank, told Xinhua.

Pung Kheav Se said currently RMB, U.S. dollars, Thai Baht and Vietnamese Dong were in circulation in Cambodia, but the amount of yuan was small, mainly used for tourism and small commodity business. He did not give specific figures.

The main reason was that Cambodia was not a developed economy and some people had inadequate knowledge about yuan, he said, suggesting China should gradually establish credit system and settlement mechanism of yuan in ASEAN, and then expand its use globally.

Su Ning, vice governor of China's central bank, said financial cooperation between China and ASEAN was still at the initial phase and financial markets were not open enough. But potential for cooperation was huge as finance in China and ASEAN seeing fast development currently.

China has been launching pilot RMB programs over the years, but the pace has obviously quickened since the onset of the global financial crisis as the U.S. dollar has been getting weaker, arousing concerns that an unstable dollar would lead to increased costs and risks for traders.

Last December, China announced pilot programs to settle trade deals in yuan between the country's two economic powerhouses, Guangdong Province and the Yangtze River Delta (which includes Shanghai) and the two special administrative regions of Hong Kong and Macao. A similar arrangement was proposed for exporters in Guangxi and Yunnan Province in southwestern China to settle trade in yuan with ASEAN.

In April, China announced a pilot program to settle cross-border trade deal in yuan in five cities including Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan.

Currently, China has sealed cooperation agreements of bilateral trade settlement with the central banks of Laos and Vietnam in ASEAN.

EXPECT WIDER RMB USE

A Vietnamese furniture trading company named Vietnam Charity Trading Company Ltd. had attended the expo for five years. It began trades with China 22 years ago and has been exporting 70 percent of its products to China.

The company buys materials from Laos and sells products to China and other countries, in which dollars, yuan and Vietnamese Dong are adopted. "That makes the process very complex and always results in losses because of the fluctuation of exchange rates," said Huang Yifan, executive director of the company.

"I really hope there is a single currency like the euro to cut off the cost of exchanging currency and make the whole process easier," she said.

"I hope yuan could be the one as it has been stable and welcomed by the ASEAN people," she said, adding that yuan is very popular in Vietnam, Cambodia and Laos.

Grace See Choo, managing director of Grace Cosmetics, a Malaysian cosmetic company, said her company had been importing packing materials from China since 2000. "We always traded in yuan, which operates well," she said.

"China is a huge market for us. Guangxi's market alone is larger than that in our whole country. We prefer yuan as the trading currency if the Chinese part want the same," She said. The company now is looking for a Chinese agent to explore Chinese market.

Although yuan had gained reputation among ASEAN people, efforts of the ten nations' central banks were still necessary to commit to a consensus of popularizing RMB, Teng Chong said.

Xu Ningning said new economic situation had created stage in Asia for RMB. The three FTAs between ASEAN and China, Japan and the Republic of Korea, respectively, will build a wider platform for RMB exchanging.

"Although it needs time to breed a new trade market or a new currency market, the CAFTA is believed to create new space for the regionalization of RMB," Xu said.

Source:Xinhua

 

[SinoIndusFriendship]

Shanghai eyes free exchange of yuan and New Taiwan dollar

Shanghai Daily, October 26, 2009



Shanghai has applied to regulators to launch a free exchange between the yuan and the New Taiwan dollar to enhance financial cooperation, the head of the Shanghai Financial Service Office said yesterday.

"With growing trade between Shanghai and Taiwan in recent years, we hope that a free exchange between the yuan and the New Taiwan dollar can be conducted in Shanghai as a trial," said Fang Xinghai at the 6th China International Finance Forum.

"We have applied to the regulators and expect it will be approved soon," Fang said at the two-day forum which ended yesterday.

Shanghai has recently launched a cross-border currency clearing system and Fang expects that it will be extended to Taiwan soon.

By the end of April, Taiwan had invested US$5 billion in more than 6,000 projects in Shanghai, and trade between the two sides totaled US$13.68 billion in the first eight months of this year.

Although the two sides must overcome some barriers in financial cooperation, Fang said they can explore possibilities in innovative products, such as exchange-traded funds that enable investors to buy or sell shares in an entire benchmark portfolio.

"The Shanghai Stock Exchange is making efforts to introduce ETFs based on overseas equity indices (and) we can also expect Taiwan and the mainland to introduce ETFs based on each other's index," Fang said.

The two sides can also cooperate in sectors that are not directly supervised by the central government, such as venture capital.

"Taiwan is very successful in the venture capital sector, while the Chinese mainland is still in the first stage. Policies have now been eased so that Taiwan VC firms can set up branches on the mainland," Fang noted.

The Chinese mainland and Taiwan in April sealed a cooperative financial regulatory mechanism.